Struggling oil and gas producer Southwestern Energy Co. (NYSE: SWN) said in a filing Thursday with the U.S. Securities and Exchange Commission (SEC) that it has notified employees of a workforce reduction plan that will affect more than 1,100 of them. Some of the affected employees are being offered a chance to stay with the company in reduced roles.
According to the filing, Southwestern Energy expects to take a pretax charge of $60 million to $70 million in the first quarter of 2016, comprised of one-time severance and tax payments of $45 million to $50 million and costs to eliminate service requirements for equity awards of certain terminated employees amounting to $15 million to $20 million.
The company also said:
The 2016 workforce reduction will affect more than 1,100 employees and follows a smaller reduction that occurred during the third quarter of 2015, the one-time costs of which were immaterial and were reflected in the financial statements for that period. Together, these reductions are expected to decrease current costs of the Company by approximately $150 to $175 million on an annual basis, exclusive of the one-time termination benefits; a portion of these savings represent costs that would have been capitalized rather than expensed. The workforce reductions result primarily from anticipated lower drilling activity. At the start of 2016, the Company had no drilling rigs in operation but has not finalized its capital budget and operating plan for the year.
In the past 12 months, Southwestern Energy’s share price has fallen by two-thirds and traded up nearly 15% in the early afternoon Thursday, at $8.42 in a 52-week range of $5.00 to $29.61.
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